There Are Only Two Things That Matter At Today's iPhone Event

We're hours away from Apple revealing the newest iPhones,
the iPhone 5S, and a lower cost iPhone, the iPhone 5C.

The iPhone 5S is expected to look largely the same as the iPhone
5. Its major innovation is expected to be a fingerprint scanner
on the home button that will unlock the phone. (Well, that, and
the fact that it's going to be available in a gold color
way.)

Well, to those people we say, first, hold your horses. Let's see
what Apple does with the fingerprint scanner. It could be a good
way to securely unlock the iPhone without a password. If it
really works, it could be nifty tech.

Second, we say, the fingerprint scanner is mostly a sideshow for
Apple and its iPhone business.

Yes, it's important for Apple to continue adding new technology
and new features for the iPhone. But, really, from here on in,
it's only going to be incremental upgrades to the iPhone. Most of
the heavy lifting is done.

In the future the iPhone will get bigger screens, better cameras,
(hopefully) better battery life, and all of it will seem like a
snooze. There's a reason
we don't get annual events for desktop computers. At this point
the upgrades aren't all that major.

Reports indicate Apple will
announce a deal with China Mobile, which has 700 million
customers, making it the world's biggest carrier. It's also
reportedly got a deal with Japan's largest carrier, DoCoMo. That
will give Apple another giant base to sell the
iPhone.

It's also set to sell a
lower-cost iPhone, the iPhone 5C. It's
expected to cost between $400 and $500. That's a bit on the
high-side, but it should be enough to open up the "mid-range" of
the smartphone market around the world for Apple.

Will a lower-cost iPhone hit
the average selling price of the phone? Probably. Will it hit
Apple's margins? Perhaps.

But, the alternative is to
protect its margins, own the high-end of the market, and get
relegated to a niche player. That's a path to doom. Android will
take over, developers will eventually have to support Android
before iOS, and Apple will be hosed.

Since Steve Jobs saved Apple,
the company has been on the offensive, playing disruptor in the
music market with the iPod, mobile market with the iPhone, and PC
market with the iPad.

Jobs is gone, and his
replacement CEO Tim Cook has a new company to deal with. He has
to play defense in a way that Jobs never did. Jobs just made his
old products obsolete. (iPhone killed iPod, iPad killing
Mac.)

Apple doesn't have an iPhone killing product up its sleeve right
now. So, today, we get to see
how Cook plays defense. How does Apple protect its turf? How does
it protect the mobile smartphone business that it
built?

And, to be clear, we don't
think Apple is done playing offense. We expect new
category-defining products to come in the next two
years.

Just today, we're not getting
it. The fingerprint scanner might be neat, but it's not the most
important thing to take away from this iPhone event.

This event will reveal Cook's
first major move as CEO to extend the iPhone business.